RealPage® MPF Research Division Reports Accelerating Apartment Rent
Growth, Particularly in the Western Region of the US

CARROLLTON, Texas--(EON: Enhanced Online News)--U.S. apartment rent growth is at a 15-year high, according to MPF
Research, the rental market intelligence division of RealPage,
Inc. (NASDAQ: RP).
Mid-2015 new resident rents topped mid-2014 rates by 5.2 percent, with
that annual growth including a price bump of 2.5 percent occurring
during April to June. Both the annual and quarterly rent growth figures
are the biggest hikes in those performance metrics seen since the
1999-2000 timeframe.

“While new supply tends to slow rent growth historically, that hasn’t
been the case as of late”

Renewal Pricing Up

Renewal leases executed in the second quarter were priced 4.3 percent
above last year’s renewal rents. Renewal pricing is growing in
importance for apartment owners and operators, as more residents are
staying put – rather than moving – when their leases expire. In the
second quarter, 51.9 percent of households with expiring apartment
leases remained in place, compared to the 50.6 percent retained when
leases expired a year earlier. Prior to 2010, typical resident retention
upon lease expiration ran at a notably lower level of around 45 percent.

“While apartment rents are rising at a significant pace all across the
country, the nation’s average price increase is being skewed quite a bit
by the surging rents in the Western region of the country,” said MPF
Research vice president Greg Willett. Annual new resident rent growth is
at 7.8 percent in the Western region, compared to 4.1 percent in the
South, and 3.3 percent in both the Northeastern and Midwestern regions.
Furthermore, rent growth is accelerating much more quickly in the West
than other parts of the country.

Annual Rent Growth for New Residents by Region

Year Ending in the Second Quarter 2015

Metro

Current Rent Growth

Year-Ago Rent Growth

West

7.8%

5.0%

South

4.1%

3.0%

Northeast

3.3%

2.4%

Midwest

3.3%

2.1%

“Throughout the current economic cycle, the nation’s rent growth leaders
have been in the Pacific Northwest, from Seattle down through the San
Francisco Bay Area, plus Denver,” stated Willett. “What’s really driving
such high levels of overall growth in the West is that price increases,
well above the national norm, have spread to the region’s other large
markets, including all of Southern California, Phoenix, Las Vegas, and
Sacramento. These areas were slow to achieve economic recovery coming
out of the recession, but now are adding jobs and households at levels
that stimulate considerable apartment demand, with occupancy rates
tightening and rents rising sharply.”

Among the nation’s biggest metropolitan areas, 16 have new resident rent
growth climbing more than 6 percent annually, with 13 of them in Western
markets.

Leaders in Annual Rent Growth for New Residents

Year Ending in the Second Quarter 2015

Rank

Metro

Rent Growth

1

Oakland

11.8%

2

Portland

11.3%

3

Denver-Boulder

10.2%

4

San Jose

10.0%

5

San Francisco

9.9%

6

Seattle-Tacoma

8.4%

7

Sacramento

7.6%

8

San Diego

7.5%

9

Atlanta

7.3%

10

Phoenix

7.2%

11

Las Vegas

7.1%

12

Los Angeles

6.7%

13

Fort Worth

6.6%

14 (tie)

West Palm Beach

6.2%

14 (tie)

Riverside-San Bernardino

6.2%

16

Orange County

6.1%

Tight Occupancy, Increased Demand and Sustained
Construction

Sizable rent growth in U.S. apartments reflects that occupancy is very
tight. The occupancy figure as of the second quarter was 94.9 percent,
up slightly from 94.6 percent a year earlier.

Demand for apartments across the nation’s 100 largest markets came in at
98,210 units during the second quarter, well surpassing concurrent
completions that totaled 52,666 units. Annual demand for the second
quarter registered at 250,157 units, just ahead of the 240,715 new units
delivered.

Ongoing construction continues to hover around the mark of 400,000
apartments—a level that has been sustained for two full years—with
421,345 units under construction in the 100 largest metros at the end of
the second quarter.

“While new supply tends to slow rent growth historically, that hasn’t
been the case as of late,” Willett said. “Construction on luxury units
in the most desirable neighborhoods results in new product rents being
too high to pull many residents out of the existing stock. Nationally,
the typical monthly rent for new communities is around $1,600, which is
a little more than 20 percent over rents in the best properties built
prior to 2010.”

MPF Research forecasts that U.S. apartments will remain essentially full
in 2015-2016. “While overall occupancy should inch down very slightly,
it really just reflects the volume of product moving through initial
lease-up, rather than any real softening in the anticipated
performance,” Willett said.

Rents will likely continue to rise. “The pace of price increase should
cool a bit from today’s level, but annual growth, at roughly 4.5 percent
or better, is predicted over the next 12 to 18 months,” Willett said.

Rent growth and other key performance indicators for the U.S. apartment
market are discussed by MPF Research analysts in
this video.

RealPage, Inc. is a leading provider of comprehensive property
management software solutions for the multifamily, commercial,
single-family and vacation rental housing industries. These solutions
help property owners increase efficiency, decrease expenses, enhance the
resident experience and generate more revenue. Using its innovative SaaS
platform, RealPage’s on-demand software enables easy system integration
and streamlines online property management. Its product line covers the
full spectrum of property management, leasing and marketing, asset
optimization and resident services solutions. Founded in 1998 and
headquartered in Carrollton, Texas, RealPage currently serves over
10,000 clients worldwide from offices in North America, Europe and Asia.
For more information about the company, visit http://www.realpage.com.

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